Coastal Valuations has answers to "Frequently Asked Questions"

Coastal Valuations is eager to elaborate on any concerns you might have about appraisals in Mobile and Mobile County. Don't hesitate to contact us today.

Describe an appraisal
Describe what an appraiser does
Why would someone require a real estate appraisal?
How is an appraiser different than a home inspector?
What is the difference between an appraisal and a comparative market analysis (CMA)?
What are the contents of an appraisal report?
Once the assignment has been completed, how can I have confidence that the value indicated is trustworthy?
What goes into an appraiser's certification?
Who are an appraiser's customers?
Where does Coastal Valuations get the data used to estimate values in Mobile County or other areas?
What can a full appraisal do for me?
My mortgage statement has an item on it for PMI? Can I get rid of that?
How do I get ready for the appraiser?
What does "Market Value" mean?
Who has rights to the appraisal report?
I want to get more for my house. Where should I spend money renovating?



Describe an appraisal   (Back to top)

An appraisal report is an inspection allowing the appraiser to come to an opinion of value. This opinion or estimate is discerned by using a formal process that usually uses the three main "common approaches to value". The Cost Approach is one of the approaches that real estate appraisers use to find the value of a home; it involves concluding what the improvements would cost less physical deterioration, adding the land value. The Sales Comparison Approach deals with finding comparable homes in close proximity and discerning value based on comparing those houses to the home being investigated. The Sales Comparison Approach is normally the most accurate and best indicator of a liklely sales price for a residential property. The third approach is the Income Approach, which is the best method in appraising income producing properties - it deals with estimating what an investor would pay based on the income produced by the property.

Describe what an appraiser does   (Back to top)

An appraiser forumlates a professional, unbiased opinion of market value, to be used in making real estate transactions. Appraisers exhibit their conclusions in appraisal reports.


Why would someone require a real estate appraisal?   (Back to top)

There are a lot of reasons to purchase an appraisal from Coastal Valuations with the usual reason being real estate and mortgage transactions. Other reasons for getting an appraisal include:
  • To receive a loan.
  • If you would like to lower your property tax burden.
  • To show a homeowner has 30% equity and remove PMI.
  • To contest inflated property taxes.
  • To handle an estate.
  • To provide you an edge when purchasing real estate.
  • To find an honest property value when selling real estate.
  • To ensure parties are provided just compensation in eminient domain cases.
  • Because a government agency such as the IRS requires it.
  • If you ever find yourself in a lawsuit.
For a more detailed explanation of the appraisal process click here.


How is an appraiser different than a home inspector?   (Back to top)

Home inspectors do not generate an opinion of value and are not appraisers. An inspection is a third-party evaluation of the accessible structure and electrical and mechanical systems of a home, from the top to the bottom. Generally, a home inspection report will evaluate the amenities and the requirements of the property: air conditioning (weather permitting), electrical functions, the condition of the heating system, the plumbing; then the structural integrity of the home such as the attic, visible insulation, walls, floors, ceilings, windows, then the foundation, basement and visible structures.

What is the difference between an appraisal and a comparative market analysis (CMA)?   (Back to top)

To be blunt, it's apples and oranges. The CMA relies on indefinite local market trends. The appraisal is based on similar verifiable comparable sales. The appraisal report will also contain location and construction values. All a CMA does is generate a "ball park figure." Delivering a defensible and careful analysis, an appraisal will give a clear opinion of value.

The credentials of the person behind the report is hands down the biggest difference between a CMA and an appraisal. Real estate agents write CMA's, and they don't always know the whole market or bear specific competence when it comes to home valuation. The appraisal is produce by a licensed, certified professional who has made a career out of valuing properties. Further, the appraiser is an unbiased voice, with no vested interest in the value conclusion, unlike the real estate agent, whose income is tied to the value of the home.

What are the contents of an appraisal report?   (Back to top)

The main purpose of an appraisal report is to let the reader know the value of the real estate in question, and depending on the scope of the report, one will customarily see the following:
  • The client and whose purposes the appraisal is to serve.
  • How the appraisal is supposed to be used.
  • The reason for the assignment.
  • The type of value reported and a definition of the value reported.
  • The effective date of the appraisal.
  • Relevant property characteristics, including: location, physical description, legal attributes, economic factors, the property rights in question, and non-real estate items included in the appraisal, such as personal property, items that are more or less permanently installed and even intangible considerations.
  • Any known easements, restrictions, encumbrances, leases, reservations, covenants, contracts, declarations, special assessments, ordinances, and the like.
  • Division of interest, such as fractional interest, physical segment and partial holding.
  • The scope of work used when completing the job.
For a more in depth view of all that goes into an appraisal report click here: Sample Appraisal Report


Once the assignment has been completed, how can I have confidence that the value indicated is trustworthy?   (Back to top)

In the documentation of an appraisal, each appraiser must ensure the following:
  • That the information analysis implemented in the appraisal was suitable.

  • Whether individually or collectively, there were no crucial errors contained in the report, nor any material details left out.

  • That appraisal services were provided in a careful and conscientious manner.

  • The final appraisal report was understandable, sound and not easily discredited.
To become a state licensed appraiser, there are strenuous education requirements as well as experience that must be attained - all with the end goal of being able to provide unbiased value opinions. Likewise, appraisers must abide by a stringent industry code of ethics and observe national standards of practice for real estate appraisal. The rules for working up an appraisal and reporting its results are guaranteed by enforcement of the Uniform Standards of Professional Appraisal Practice (USPAP).


   (Back to top) Regulations regarding licensing and certification are different from state to state. However, licensing and certification is most often associated with many hours of classroom study, tests and practical experience. Once licensed, he/she is required to complete continuing education courses so the license remains current. To see the specific requirements for any state click here.

Who are an appraiser's customers?   (Back to top)

Mortgage lenders are an appraiser's most likely client, requiring their services to ensure real estate involved in a mortgage transaction is enough to cover a loan balance in the case of default. Appraisers also provide opinions for legal settlements, tax matters and investment decisions.

Where does Coastal Valuations get the data used to estimate values in Mobile County or other areas?   (Back to top)

One of the most important things an appraiser does is to compile property data. Data can be classified as either Specific or General. Specific data is collected from the home itself; Location, condition, amenities, size and other specifics are gathered by the appraiser while on site.

General data is received from a variety of sources. Local Multiple Listing Services (MLS) provide information on recently sold homes that could be used as comparables. To verify actual sales prices, we research tax records and other public documents that are usually online nowadays. Flood zone data is gathered from FEMA data outlets, such as a la mode's InterFlood servers.

And last but not least, the appraiser assembles general data from his or her past experience in creating appraisals for other houses in the same market.


What can a full appraisal do for me?   (Back to top)

If you're involved in any kind of financial decision and the value of your home is relevant, you'll want a full appraisal. When selling your house, an appraisal assists you in setting the most appropriate price. If you're buying, it makes sure you don't overpay. For people settling an estate or divorce, an appraisal from Coastal Valuations is the best documentation to ensure assets are divided fairly. A house is often the single, largest financial asset anybody owns. Don't make decisions in the dark with a professional appraisal.


My mortgage statement has an item on it for PMI? Can I get rid of that?   (Back to top)

PMI is an acronym for Private Mortgage Insurance. This supplementary plan covers the lender if a borrower defaults on the loan and the market price of the property is lower than what is owed on the loan. Once you can prove the amount you owe on your home is less than 80% of the home's market value, you can make a case to your lender to drop the PMI.

Did you secure your mortgage with less than 20% down? Call Coastal Valuations today at 251-583-2791. You may be able to get rid of your Private Mortgage Insurance premium.

How do I get ready for the appraiser?   (Back to top)

The first step in most appraisals is the home inspection. What this entails is the appraiser, after setting up an appointment, personally going through the home - recording the layout of the rooms, taking photos and documenting the general status of its features. On the home's interior, make sure it is clutter free and that we can find our way to things like furnaces and water heaters. In the yard, trim any bushes so we can be free to get an accurate measurement of exterior walls.

To help expedite our work plus ensure a more accurate report, attempt if possible to have the following items:
  • A survey or plot map of the property and building (if available).
  • Any paperwork, such as a title policy with information on encroachments or easements encroachments or easements.
  • Any "Homeowners Associations" agreements or, if applicable, condo covenants or fees .
  • Locate copies of the current listing agreement, broker's data sheet and, if the sale is "pending", the purchase agreement.
  • A list of "suggested" improvements if the property is to be appraised "as complete".

What does "Market Value" mean?   (Back to top)

In real estate appraising, Market Value (as opposed to Fair Market Value) is commonly defined as:

"The most probable price (in terms of money) which a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller each acting prudently and knowledgeably, and assuming the price is not affected by undue stimulus. Implicit in this definition is the consummation of a sale as of a specified date and the passing of title from seller to buyer under conditions whereby: the buyer and seller are typically motivated; both parties are well informed or well advised, and acting in what they consider their best interests; a reasonable time is allowed for exposure in the open market; payment is made in terms of cash in United States dollars or in terms of financial arrangements comparable thereto; and the price represents the normal consideration for the property sold unaffected by special or creative financing or sales concessions granted by anyone associated with the sale."



Who has rights to the appraisal report?   (Back to top)

In most real estate transactions, the appraisal is ordered by the lender. Even though it's the buyer that eventually pays for the report, the lender is the intended user. The buyer is certainly entitled to a copy of the appraisal - it's usually bundled with all the other closing documents - but is not entitled to use the report for any other purpose without permission from the lender.

This rule doesn't apply when a home owner hires an appraiser directly. In these cases, the appraiser may state the purpose of the appraisal; for PMI removal, or estate planning or tax challenges, for example. If not noted otherwise, the home owner can do whatever they want with the appraisal.


I want to get more for my house. Where should I spend money renovating?   (Back to top)

It really depends on the market. For example, if you're in a neigborhood of small to medium priced homes, a media room may not be something people in that price range want

As a rule, the most value returned from renovating a home comes in the kitchen. According to one national survey, kitchen remodels returned an average of 88% of the investment. In other words, a $10,000 kitchen remodeling project would add approximately $8,800 to the value of the home. Bathrooms weren't far behind, yielding 85%. On the contrary, work that may not increase your value would be painting just for the sake of redecorating.